For our Clients, Colleagues, and Friends,
From time to time, we look at how certain mortgage stocks have done. Here’s how some of the biggest bank stocks have done. We threw in the S&P 500 just for the heck of it.
We recently gave a webinar on "Benchmarking for Performance and the Performance Ratios Every Mortgage Banker Must Know" and had 239 people register and actually attend to hear it live. If you weren't one of them, here's the recording where we run through the slide deck with lots of examples: MBA Benchmarking Webinar Recording.
When President Bill Clinton left the White House in 2001, 12 million more Americans had jobs than when he first became president, annual deficits became huge surpluses, and his approval ratings were 66%. Clinton was raised in a small Arkansas town called Hope, and with our paying down the federal debt, the nation had much to be hopeful about. Here's a funny video of his last few days in office: “The Final Days” White House Correspondents’ Dinner Skit.
Poem of the Week, from 1920s writer Dorothy Parker: “I like to have a martini, two at the very most. After three I’m under the table, after four I’m under my host.” Very clever.
Did you know that Rocket Mortgage has a market cap of $40 billion?
Houlihan Lokey stock returns reflect what a great investment banking company they are. In the last ten years, they are up 824%, three and a half times the S&P 500, which is up 237%:
A few Saturdays ago, I had my seventh or eighth annual backyard end-of- summer party. There was a mariachi band, and Ann Savoy and the Magnolia Sisters, all five from Louisiana bayou country. Being a Cajun, Ann sings all her songs in French, or I guess what you’d call Creole French. The one exception is that she did one album with Linda Ronstadt, Adieu False Heart, the only album out of 30 or more that Ann sang in English and Linda's last studio album before retiring due to illness in 2011. Most of her music is upbeat, and it had people dancing on the deck, on a walkway, and on the lawn. I rented 80 folding chairs, and all were filled with people except those dancing or hanging out at the bar. At the end, she sang in English Who Knows Where the Time Goes, and Ann sang it slow and beautiful and haunting, and what had been a pretty lively crowd of 90 people suddenly sat there in stunned silence. I wish you could have been there: Joe Garrett’s Backyard Party 2025.
The companies who do your TBA hedging trades are called broker/dealers, something you already know, but did you know (1) how many broker/dealers there are, and (2) who regulates them? The answers are 1) that there are 3,249 of them, and (2) they are regulated by the Financial Industry Regulatory Authority (FINRA). Very few of you perform due diligence on them, but we once had a near death experience with broker/dealer DLJ because we hadn’t done due diligence on them.
We had just bought American Liberty Bank, and thanks to Brenda Usher, we had gotten our mortgage banking program up and running very quickly. I was getting dressed one morning and had the financial news on the TV. They announced that DLJ might not open, that they might be filing a bankruptcy that day. I immediately realized that if they did so, we could lose a huge amount of our capital, would fail our capital and liquidity requirements, and be seized by the FDIC. We had done a $5 million Fannie Mae MBS, and only had one broker/dealer then, and had directed that Fannie Mae was to ship our MBS to DLJ. We’d of course tell the judge that this MBS was legally ours, and I could see the judge telling us, “Yeah, yeah, get back in line, and we’ll start reviewing petitions in week or two.”
We were so new that we’d signed up with DLJ as our only broker/dealer, and that was where Fannie Mae was going to ship our MBS in an hour or so. Brenda came up with the idea to have Fannie Mae ship the MBS to Goldman, Sachs instead, and since Goldman had no idea who we were or why they got this MBS, we’d buy time to figure something out. I got someone’s name at Goldman, some young kid right out of college, sent him our financials, which looked strong, and told him if he could get us approved that morning even, on a temporary basis, I’d make certain the Goldman CEO (future Secretary of the Treasury Robert Rubin) learned what a great job he’d done for us and that we’d start trading with them and would use them to buy bonds for our held-for-investment bond portfolio.
None of this would have happened if we had done due diligence on DLJ and seen how over-leveraged they were. Call us if you want to learn more about due diligence on broker/dealers. We know a firm that does this analysis on broker/dealers on an outsourced basis. Someday, having done due diligence on your broker/dealers may save your company.
Robert Caro has written four books on Lyndon Johnson, with over 3,000 pages total. He’s working on volume five, yet he turns 90 on October 30. Let’s pray he lives long enough to finish his fifth book on LBJ.
I mentioned Linda Ronstadt, and she and Ann Savoy are best friends. Linda came to my party a few years ago, but when I told Ann she could invite Linda again this year, she said Linda can’t leave her San Francisco home anymore. Linda has progressive supranuclear palsy (PSP), a rare neurodegenerative disease that’s like Parkinson’s Disease, only worse. What she has affects movement, balance, and cognitive function. It's tragic that Linda can barely speak anymore, especially when you see and hear how beautiful her voice was and how talented she was. Here's a video of Linda Ronstadt when she was at the height of her powers: Blue Bayou Live.
Here’s an interesting two-minute video in the White House of former President Richard Nixon meeting President Bill Clinton. Go to 12:52 in: President Clinton meets President Nixon (1993). In his autobiography, Clinton wrote that when he first became president, Nixon sent him a 12-page letter on dealing with Russia, and Clinton said that it was the most intelligent and insightful thing he’d ever read on the topic.
Movie of the Week: A black and white 1954 film, Suddenly, starring Frank Sinatra as a man who was paid to assassinate the president of the United States. What occurred to me watching this movie was just how good an actor Sinatra was. Do you remember how over-the-top psycho Richard Widmark was in Kiss of Death, when he tied an old lady to her wheelchair and pushed it down a steep flight of stairs, with that really psycho laugh? Sinatra was also psycho, but much more subtly than Widmark, and as result, he was much more believable. Even if he’d never been a singer, I think he’d have been a great actor.
Two extras: (1) Can you think of another Sinatra movie that involved the assassination of a President, and (2) did you know that Richard Widmark was Sandy Koufax’s father-in-law?
The other, more famous Sinatra movie about the assassination of a President was the original The Manchurian Candidate, one of the best movies ever made. Go rent it tonight.
Too bad they didn’t have a person standing next to this 1966 Lincoln Continental to show how long it was. Back in those days when they built big cars like this, they used to get 10 or 11 miles per gallon.
Quote of the Week: “Courage is grace under pressure.” -- Ernest Hemingway.